tv First Business FOX December 7, 2012 4:00am-4:30am PST
plus, coffee talk in today's traders unpugged. what's the better buy: starbucks or green mountain? and, should unions become the high hope for low wage workers? first business starts now. you're watching first business: financial news, analysis, and today's investment ideas. good morning on this jobs friday. it's december 7th. i'm angela miles. in today's first look: the unemployment numbers. the market expects 90,000 jobs were added to payrolls in november and the unemployment rate will inch up to 8%. stocks and gold rallied ahead of today's numbers on jobs. however, oil slid more than $1 due to a growing supply of gasoline. netflix ceo reed hastings has received a wells notice from the sec. it reportedly has to do with information disclosed on his facebook page. also, according to reports, the washington post may be closer to charging customers to read
artcles online. tim mulholland of china-america capital joins us on this jobs friday. tim, we are being told there could be a murky jobs number because of hurricane sandy. what do you think about that? > > i think the market will dismiss a weaker-than-expected number because of hurricane sandy and the distortions that it has and look more toward next month, or january's report, that we will get. so, i think they will let it slide. but it should be weaker than expected. i think that is expected by the market, so it shouldn't be a surprise. > goldman sachs has a call out that we will see a renaissance in commodities. are you bullish on any particular commodities here? > > i am bullish on the agriculturals, for reasons of which the supply and also the growing drought that we had this past year, the continued conditions that make for dry growing season next year as well. so i think from a supply/demand standpoint, yes, i think agricultural. the other thing i like, commodities in general, is when the fed's buying $85 million a month worth of treasuries, i think you are going to have to like commodities. > what is your play on the
dollar? > > i would have expected it would have had a little more strength this year, especially into the fall. however, given the fact that the fed is stepping on the gas, and, depending on what happens with the fiscal cliff and of course the economy next year, i think the dollar is going to drift a little bit weaker. nothing dramatic, but i think it will drift a little weaker as the year progresses. > thanks tim. have a good trading day. > > thanks. just in time for the holidays, hostess brands' layoff of more than 18,000 employees is part of a bulge in end-of-the-year layoffs this year. job cuts are up for the third straight month, and our cover story looks at whether this is a trend that may continue in the new year. job cuts nationwide were up for the third consecutive month in november. november would have been lower, but hostess brands'
18,500 layoffs as a part of bankruptcy pushed the number higher. "it's not a reflection of the strength of the economy as a whole." since january, the number of announced layoffs is actually 13% lower than it was in 2011. that's despite a dreadful january and february that saw more than 50,000 layoffs at american airlines, pepsico, j.c. penney, metlife and procter and gamble. "those are very specific company-based layoffs. they're not even sector-based." hostess brands is controlled by hedge funds that have lined up more than a hundred potential buyers for hostess brands' three dozen factories that produced lunchbox staples: twinkies, ho-hos, and ding- dongs. "it's highly problematic when hedge funds own a buisness, because the primary goal is to appease shareholders and investors." asset management firm perella weinberg partners is advising
hostess brands says the bidders include five national retailers such as supermarkets. reportedly, six of the bidders have hired investment banks to help. "it would not be a surprise to see a 'white knight' come in and buy the whole thing because of its market presence." but while 19 corporate officers receive nearly $1.8 million in incentive pay to stay on through the wind-down process, what happens to the employees now on unemployment who say their pensions have not received contributions from the company in over a year? "there is a marginal trend to bring business back to the u.s., and food is one of those more likely to stay 'in country' than go elsewhere." challenger, gray and christmas say december is often when layoffs are announced, a process that often continues into january. wall street alone has lost a net 1,200 jobs in 2012 according to new york state's comptroller. and it's about to get a whole lot worse. citigroup is laying off 11,000 people worldwide.
bank of america and hsbc combined plan for 40,000 layoffs this year. ubs said in october it would cut 10,000 workers. all told, more than 300,000 financial industry jobs have been lost worldwide during the past two years. the bank belt-tightening is expected to continue in 2013. macs are making their way back to the u.s. apple ceo tim cook told bloomberg this week the company will begin manufacturing a line of mac computers in the u.s. most of apple's products are made in asia. factories such as foxconn, a major apple supplier, have come under heavy scrutiny for low wages and poor working conditions. cook said the company will spend $100 million on the manufacturing move in the states, but no word yet on where it will take place. in other apple news, the iphone is getting picked up by another carrier. t-mobile will begin selling the iphone next year. talks are back in the fiscal fight. according to the wall street journal, the staffs for president obama and house
speaker boehner are talking again. it follows a nearly week-long silence. wednesday, the presdient and congressman boenher spoke by phone. on thursday, the president said he was optimistic a deal would get done as he sat down with a middle-class family in virginia to promote his tax plan new jersey governor chris christie is making a pitch to washington for more funds to cover the cost of hurricane sandy. christie is seeking $83 billion in extra disaster aid from the government. he's making the plea on behalf of his home state of new jersey, as well as for new york and connecticut. christie met with president obama at the white house first, then with house speaker john boehner at the capital. at a senate hearing thursday, senator charles schumer of new york presented his case for rebuilding the storm zone. "new york has no choice, we have to adapt. new york and new jersey are a waterfront region in the path of violent new weather realities." president obama meanwhile is seeking $50 billion from congress for emergency aid for 11 states with storm damage. the improving housing market is turning into a wealth builder
for americans. according to the federal reserve, financial wealth in american households grew to $64 trillion, up $1.7 trillion during the 3rd quarter. here's how that happened: the value of real estate rose $300 billion, while stocks climbed $520 billion. economists have said an increase in wealth translates into consumer spending. the report from the fed also shows americans cut debt by 2% last quarter. space exploration technologies, better known as space x, has landed a big - and much desired - new customer this week: the u.s. air force. the privately- held space exploration company already has a $1.6 billion contract with nasa. this new venture allows it to demonstrate the dependability of its falcon rockets. the deal is part of a special set-aside program that will help companies such as space-x compete against lockheed martin and boeing, both long- time aerospace contractors. the
first air force launch of its falcon 9 rocket is scheduled for 2014. the stakes are high for zynga. the nevada gaming control board is considering if zynga is worthy of a gaming license. currently, game lovers can gamble with virtual chips on the website. a licence would make it possible for gamers on zynga to play with real money. if that happens, it would help the company win millions of customers. the licensing process tends to take up to 18 months. darden restaurants says that it won't cut employee hours after all as a way around paying for employees' healthcare. the parent company of olive garden and red lobster claimed paying for basic healthcare coverage for all full-time employees, as mandated by obamacare, would be devastating. as a result, it had planned to bump some full- time employees down to part- time. after what it calls "negative media coverage," darden has reversed course and says it will not do so. it's not just santa working around the clock in the days
before christmas. now, so are macy's employees. the nation's largest department store chain has announced that most of its stores will remain open for 48 hours straight the weekend before christmas. a note to procrastinators: after closing at midnight on december 23rd, some stores will be open on christmas eve until 6pm. the hardcore push by retailers to get holiday shoppers in the door won't be going away anytime soon. the latest data shows thanksiving was a bigger shopping day than black friday. according to a new reuters poll, 30% of respondents said they shopped on thanksgiving, compared to 29% who said they shopped on black friday. while not a significant difference, it does point to changing attitudes about holiday shopping. still to come, friday fun with traders unplugged. this time around, traders tell you if oracle is a buy. and will this week's bonus round question be a piece of cake? but first, are unions the answer for workers from
♪ [ game announcer ] will he dunk it? yes, he will. [ male announcer ] mcdonald's tender, juicy chicken mcnuggets in creamy ranch and spicy buffalo sauce. just $4.99 for 20 of your favorite chicken mcnuggets. ♪ [ game announcer ] will he dunk it? yes, he will. [ male announcer ] more ways to love mcnuggets. ♪ "fast food forward" and "our walmart" are among the organizations working on behalf of low wage workers. the groups want better pay and better working conditions for employees. bob bruno, a labor and employment relations
professor at the university of illinois at chicago joins us this morning on set. good morning to you bob. > > good morning. > are unions the answer here? > > i think unions can be the answer. they have been historically. but in these particular cases, something truly creative is going on. these workers are really not demanding a union election vote or a collective bargaining agreement. they are talking about raising standards. they are talking about conditions that are poor and trying to put some pressure on these employers to raise those up. > are the conditions that poor? is the working wage that awful? > > this wage is pretty bad. we are talking about very profitable companies, very profitable industries, in most metropolitan areas; and these workers, on average, will bring in roughly around $22,000, $24,000 a year. and for about half these workers, they are the principal breadwinners. that is about $9-something an hour,
without benefits. so it's pretty bad. > > here is a statement coming from rob karr. he is a lobbyist with the illinois retail merchants association. he says the current minimum wage is "more than fair. it is really hard on retailers and depriving young people of job opportunities." what do you think about that? does he have an argument? > > no. none whatsoever. the minimum wage is not a liveable wage, so it's well below what would be a self-sufficient wage. secondly, there have been studies where the minimum wage has been adjusted to see if it actually creates job unemployment, and it has no effect. third, there's no evidence that it actually keeps young people from finding work. what happens is, employers can afford a small, very modest increase in cost. they can either pass that along to the consumer or not. but it in fact has no negative impact on unemployment. > there are studies that show if people do earn more, they spend more, and that could help the economy and create jobs. so why
does corporate america not believe that? > > that's right, there are studies that show exactly that. and i don't think corporate america doesn't believe that. i think they do believe it. i think they are protecting their stakeholders, or their strongest interest, and that is, they want to keep as much of the profits as they conceivably can within the firm to distribute for dividends and to ceos. it has nothing to do whatsoever with what is good for the community or the neighborhood or the economy. > bob bruno. good to have you on the show this morning. take care. > > nice to be here. thanks. still ahead, what coffee stocks will serve you best? our traders pitch in their two cents on traders unplugged, next.
the cliff, coffee and the stock market climb are all making headlines this week. you've heard what the masses have to say. now, you can get the real stories as pro traders alan knuckman and andrew keene go unplugged from the cme trading floor. good morning guys. round number one: cliff climb. as corporations offer dividends now to avoid potential taxes next year, larry ellison from oracle will get $198 million from a special dividend. should investors buy or sell oracle? > > you see a lot of people chasing into these special dividend stocks. you see costco, dillard's, some of the casino stocks, people chasing in to try to get that special dividend. i don't really think it's a play. i am not trading it. > > i like this stock, but i
think it is a bit ridiculous for him to save $50 million when he is worth $41 billion- > > top 10 in the world, i think. > > $41 billion! that is a little bit ridiculous. but, the stock has been trading in a range between $30 and $33 in july, looking like it wants to break out to these recent highs at $36. so a $29 call for july of next year- > > but you're not going to get the dividend. > > -is going to cost you- > > but you're not going to get the special dividend. > > -$4. the dividend has nothing to do with it. i like the stock, and i like the fact that we have been trading sideways for the last six months. > round number two: price power. coffee is down 40% from last year. starbucks, though, that stock is up 24%. green mountain is down 32%. what is the best coffee play here? > > i think starbucks has already seen a pretty healthy run, but technically it broke out today. it was up 5%. the target is $60, with a recent high just above that. but i like green mountain. i like selling cash-secured puts as a
way to get into it at a discount. you can sell a put and buy the stock 15% lower than it is here, or get paid not to if the option expires worthless here in a couple of weeks. > > ok, if he is going to take green mountain then i will take starbucks. starbucks is not slowing down in china. we see slowdown in china from yum! brands. we also see it from tiffany's. starbucks had a very, very good quarter. the stock gapped higher. analyst howard schultz said the right thing, they are not slowing down in china. green mountain i think has problems. they have too much competition. they have a lot of inventory. there is possible accounting. i would not be selling puts in a stock like green mountain, that you could blink your eye, it could be $25 next week. > > it went down from $110. i'm comfortable owning it at a lower level. i think- > > what level? it traded at $29- > > if i buy it at $30, i can live with that- > > it just traded 18 two months ago-
but to get back to starbucks, starbucks is going into tea in india. that's big. > round number three: tip top ten. 10 s&p stocks make up 80% of the index climb. is that bullish or bearish for equity markets? > > obviously it is bullish. if you look at what stocks have rallied this year, we talked about it last week, is the banks. the banks have been on fire. apple is one of those stocks. even with apple sell-off yesterday - apple had the worst day in four years yesterday; the stock lost $25 billion in market cap yesterday - it is still up 33% on the year, so that has really taken the market higher. financials as well, we just saw citigroup cutting 11,000 jobs. the stock goes higher. bank of america, higher as well. > > i am optimistic- > > *i am optimistic. > > -glass-half-full type of guy, and i think a lot of other stocks will play catch-up. it doesn't matter who is driving the markets. i think there are a lot of stocks that have kind of been left behind. look at material sector stocks that have been left in the dust in all this, and i think as the dollar weakens from here, that can really help a lot of metals mining materials. > now for a bonus round of question: what company trades under the ticker symbol cake? > > i know this. > > cheesecake factory. > > cheesecake factory. [cheer > > great job guys. have a wonderful weekend. up next, getting to the core of the apple trade. what does all this talk of a "death cross" in the charts really mean for the stock? that's coming up.
this stock. is it due for more of a fall here tim? what do you see in the charts? > > just thinking back a couple of months ago, we were talking about the stock around $700, and certainly a little caution was warranted up around there. down in the mid-to-low $500s, from a fundamental viewpoint, i like the stock obviously a lot more down here. some technical reasons: there is the death cross, when the 50-day goes below the 200-day. but that $505 level that we saw about a week- and-a-half ago held today. the stock got down below $520, rallied sharply. so that kind of price action shows there are buyers down below. i like the stock anywhere in the low $500 range from a fundamental, longer-term buy-and-hold viewpoint. > right. that is just the case with apple. it can only go down so far it seems, because at some point, people think, "i really need to own this. i want to get in and here is my level." meantime, what is going on behind the scenes? why did this stock plunge from that
$700 range? is there a lot of short-selling going on in apple? > > apple was the most widely held stock, not only by individual investors but by large hedge funds. so, when they had redemptions, they had some forced selling. the stock, in my opinion, as we talked about a couple of months ago, got a little ahead of itself there. recently in the past couple of days, rumor of margin hiking on apple, china mobile maybe trying to ring more out of apple. you saw kind of that capitulation in my opinion that we saw about a week-and-a-half ago. so, that $505 to $515 level seems to be the area that holds. i like it anywhere down around the $525 to $530 range, certainly. > is there ever a chance that the charts are wrong on a stock? > > always a good chance the charts are wrong. remember, charts vs. fundamentals, charts, for a very short-term traders, certainly seem to be something that they look at, whereas charts for a long-term buy-and-hold guy really are fairly unimportant, because you really don't know a year-and-a- half from now what that chart is going to look like. so, your perspective really defines whether a chart is that important to you or not as a trader. > thank you tim, and happy
tragedy at last nights raider game. the fall that led to a fan being seriously injured. two south bay restaurants evacuated after a fire. the reason the recent storms is to blame. a strong earthquake jolts the same area of last years quake and tsunami. good morning, everybody it's friday, december 7th i'm brian flores. >> and i'm pam cook. time now almost 4:30. rosemary orozco is in for steve today. so after the big storm steve decided he needed ha little break. >> he's a little tired. good morning, to you. happy friday. we are in for a dry weekend. modest warming trend under way. we are waking up a lo